Make haste slowly

Prime Minister Manmohan Singh has spoken, at length and several times, about the need to prime the economy8217;s pump, to keep the government spending in order to ensure that demand doesn8217;t slump enough to send India into a recessionary spiral. He did so to world leaders from Asia and Europe at the summit in Beijing; he repeated himself on his aeroplane on his way back from that summit, to India8217;s assembled press corps; and again this Monday to the CEOs of Indian industry and the heads of trade organisations.

So the words have been said: investment in infrastructure, physical and social, is the need of the hour. It8217;s now time to start hearing about where the money will be spent. Speed is of the essence here; talking about pump-priming keeps confidence levels from falling but doesn8217;t actually keep demand for goods and services high. The first thing that is needed is for the government to list out a menu of projects that will receive attention; this will ensure transparency in the process, and help get things moving.

Commissioning new infrastructure projects is time-consuming 8212; that8217;s the reason why Keynesian economic policy-makers, who need quick results, typically use other methods. Still, India has an excellent way to circumvent that problem: there are already many projects pending. Expeditiously clearing their execution means things can get moving quicker. The most important thing is to ensure that there8217;s some transparency in how money is being spent, and where it is going to go. We shouldn8217;t lose sight of the fact that it is being spent for a reason, and that8217;s that it needs to feed back into aggregate demand. If it vanishes in misallocation or into rent-seeking activity, India loses its chance at fixing this, and will be out of a lot of money, as well. That8217;s unaffordable, metaphorically and literally.